As Samsung Electronics posted operating profit in the 12 trillion won range in the third quarter of this year, signaling a recovery in the competitiveness of its core businesses such as semiconductors, a sweeping personnel shake-up at the Business Support TF, which had effectively functioned as a control tower, is drawing analysis that Chairman Lee Jae-yong has begun full-fledged preparations for the future.
In business circles, with Vice Chairman Chung Hyun-ho, long viewed as Samsung's No. 2, stepping back from the front line and the Business Support TF being reorganized into a standing body called the Business Support Office, it is interpreted that Samsung Electronics is seeking internal change. With an abrupt personnel move coming earlier than in previous years, there is also speculation about a chain reshuffle of senior executives at Samsung affiliates, including Samsung Electronics.
On the 7th, Samsung Electronics announced personnel changes for appointments and role adjustments of presidents and executives in the Business Support Office. Vice Chairman Chung was appointed an adviser to the Samsung Electronics chairman, and President Park Hark-kyu was appointed head of the Samsung Electronics Business Support Office. Choi Yun-ho, head of the Samsung Electronics Management Diagnosis Office (president), was named head of strategy at the Business Support Office; Executive Vice President Joo Chang-hoon will head the management diagnosis team at the Business Support Office; and Executive Vice President Moon Hee-dong will lead the people team at the Business Support Office.
◇ Earnings recovery, legal risk resolved… sudden "generational shift" as sense of crisis eases
As the DS (Device Solutions/semiconductor) division, which had long served as a pillar of Samsung Electronics, continued to struggle, criticism mounted that the company's business competitiveness was at risk. Amid this, controversy arose that excessive management intervention by the Business Support TF led by Vice Chairman Chung repeatedly hobbled the DS division and stifled the business. In advanced industries where swift judgment is crucial for large-scale investment, research and development (R&D), nurturing new businesses, and recruiting talent, decision-making fixated on financial perspectives and the like was said to have undermined the competitiveness of the semiconductor business.
With Samsung Electronics beating market expectations in the third quarter, easing the sense of crisis, it is analyzed that the timing was right for a swift generational shift. In the third quarter of this year, Samsung Electronics recorded operating profit in the 12 trillion won range for the first time in about three years. The high-bandwidth memory (HBM) business, which had been the biggest drag on Samsung Electronics' results, also succeeded in winning supply to industry heavyweight Nvidia, signaling a revival next year.
The effective resolution of the chairman's legal risk also provided an opening for the sweeping personnel overhaul. In July, the Supreme Court acquitted in the Samsung C&T–Cheil Industries allegedly unlawful merger case, allowing the chairman to completely shake off legal risk for the first time in 10 years. A source familiar with Samsung affairs said, "It is true that as Samsung Electronics' competitiveness weakened and Chairman Lee Jae-yong's legal risk loomed, exposing Samsung to an all-out crisis, Vice Chairman Chung led the control tower," adding, "Business competitiveness is now on a recovery track, and it appears the judgment was made that it is time for a generational shift."
◇ Personnel clock moves faster than in previous years… JY begins "preparations" for future businesses
With the TF made permanent as the Business Support Office, there is also an interpretation that the chairman has moved in earnest to prepare for future businesses. Analysts say this is groundwork for stepping to the forefront of management to lead reform at Samsung Electronics and its affiliates. A business community source said, "The chairman will flesh out the blueprint for future business concepts, and the Business Support Office will play a supporting role in strengthening his control over the group."
With the personnel clock moving faster than in previous years, there is also speculation about a chain reshuffle of senior executives at Samsung affiliates, including Samsung Electronics. Typically, personnel moves at Samsung Electronics and its affiliates were carried out after mid-November. This year, however, with a preemptive, sweeping personnel overhaul targeting the Business Support Office, which had performed the group's de facto control tower function, in early November, there are expectations that the scope of changes will be large.
Before this round of personnel moves, the chairman met with Nvidia CEO Jensen Huang and also contacted Tesla CEO Elon Musk, and is said to have led to a large contract in the foundry (semiconductor contract manufacturing) business. Next week, he is reportedly set to meet the Mercedes-Benz chairman to discuss collaboration in semiconductors, batteries, and displays.